Northwood M.D. Eric Walker responds to Labour’s plans to reform the private rented sector

May 7, 2014

The Labour Party recently announced far reaching reforms of the PRS (private rented sector) that have stirred up controversy and discussion in both the media and on the social web.

These are summarised as follows:

Labour will stand up for those living in the private rented sector and make sure they get a fair deal. We understand that increasingly those renting a home aren’t just doing so as a temporary fix but families that want to put down roots and plan for the future. We will ensure the way the system works catches up with that reality.

Labour promises to:

  • Legislate to make longer term tenancies with predictable rents the norm.
  • Regulate letting agents so that instead of a free-for-all consumers get a fair deal.
  • Crack down on complicated letting agents’ fees to ensure rip-offs do not happen
  • Introduce a national register of landlords so councils can take action against the minority who exploit their tenants.

Northwood M.D., Eric Walker (pictured below), has responded to these policies.

Eric comments:

“I am a strong supporter of tenant’s rights, however one must not forget that without Landlords, there would be no Tenant’s and as such, Landlords are a service provider.

Considering the shortage of properties in the PRS, anything which discourages good Landlords can only have a negative effect on those Miliband claims to help.

  • Legislate to make longer term tenancies with predictable rents the norm.  There are very few agents which discourage long lets as commission is based upon rent reserved.In my experience, both Landlord & Tenant resist long lets and prefer no more than a year, with the option to renew. In fact, many tenants insist on a break clause in case their situation changes or the Landlord fails to perform their obligations whilst many landlords insist on the same in case the tenant fails to perform their obligations .A request for a tenancy longer than a year is rare, but very welcome.Further, many freeholders, particularly in prime London, expressly prohibit longer tenancies and whilst statute of course overrides contract, can simply refuse to grant permission. Even if this requirement was enacted, there are still mandatory grounds for possession which the inventive Landlord could employ. I wonder whether Labour will address the awful situation where a good Tenant is evicted when a Landlord is repossessed and the mortgagees in possession simply change the locks?Finally, if the Courts could speed up the eviction process and Local Authorities stopped advising Tenants to simply not pay rent and stay in a property until the bailiffs arrive, Landlords would have more confidence in the system.
  • Regulate letting agents so that instead of a free-for-all consumers get a fair deal.  Absolutely. Industry has been saying this for years, but the myriad of Labour Housing Ministers refused point blankly so to do. The Conservatives haven’t been much better, but their proposed requirement to compel letting agents to be part of an independent redress scheme is a step in the right direction. Grant Shapps also asked industry to start the process through self-regulation and consumer awareness.SAFEagent was just such an initiative and extremely well supported by Government. I can think of no member of ARLA, NAEA, RICS, NALS or the Law Society who would resist regulation. Not only does it help protect consumers, but it also creates a level playing field on which agents can compete.Too often, Landlords go with cheap agents who do not incur the costs of self-regulation and consumer protection not realising the risks this ‘saving’ carries.The issue remains, how many non-regulated agents have holes in their clients account? If regulation is thrust upon industry, many consumers will lose money. For consumers, read voters.In the press is a report of a woman sent to prison for 2 years for stealing customers money from her letting agent employer.Sadly, when a firm does the same thing, no one acts as its deemed ‘overtrading’. There needs to be regulation, proper policing and a deterrent.
  • Crack down on complicated letting agents’ fees to ensure rip-offs do not happen.  Assuming Mr Miliband is aware of the recent ASA ruling and the requirement for letting agents to display compulsory fees before a tenant enters into a transactional making decision, then I am not sure whether he is criticising the work of the ASA and suggesting it remains inadequate. He may be right as there are a large number of agents which have simply ignored this requirement. The key here isn’t the regulation, it’s the policing and enforcement. Policing to date has been consumer led as until a consumer complains no one is any the wiser. The issue is that very few consumers know the rules and many still say nothing as they just want to secure a property at a time when there is a shortage.I have always believed a simple Law could resolve this stating “Any fee or charge an agent imposes and which was not disclosed in writing prior to the commencement of the tenancy cannot be charged at a later date and any attempt to do so is an offence punishable by [a multiple] of that proposed fee or charge”.Additionally, Miliband is seeking to abolish tenants fees altogether. Many agents are struggling to make profits and let’s not forget, many of these agents provide a service to tenants as well as a duty of care. If fees were abolished, these fees will be passed on to the landlord and ultimately rents will rise. Combine this with longer terms tenancies, and tenants will probably pay more. Much has been made of the abolition of tenants fees in Scotland, however it is well known that a number of agents still impose charges.

    The key isn’t regulation, it’s transparency to ensure tenants have an informed choice.

  • Introduce a national register of landlords so councils can take action against the minority who exploit their tenants.  A national register would only serve to be a register of landlords who comply with legislation. Even a landlord fiddling his tax would resist signing up and again, how would this be policed?The most vulnerable tenants would still use rogue agents to secure a home through landlords driven further underground.Regulate the agents and give someone teeth to police the legislation and we will start to get somewhere”.

Northwood is an established, widely recognised estate agent in the U.K. and the leading supplier of Guaranteed Rent . Northwood is proud to deliver a professional service to all of their customers regardless of whether they are a landlord, tenant, buyer or seller.

Find us on Twitter @northwoodUK or visit our YouTube Channel.

Posted in

Comments are closed here.